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African economy: the limits of ‘leapfrogging’
David Pilling in Cape Town August 13, 2018
13-17 minutes
Kotiogo Ng’usilo vividly remembers the first time he saw a car. It was the 1950s and Mr Ng’usilo, a hunter-gatherer from the Ogiek tribe in Kenya’s Mau forest, thought it was a “moving house”.
These days, at 86, though he still tries to preserve a hunter-gatherer lifestyle, foraging for honey and secretly bagging the odd hyrax, he has moved with the times. He wears western clothes, buys food at the market and, like his younger relatives, uses a mobile phone. His story about the old days — which he recounts over sacred honey beer — is interrupted by incessant chirruping, not from birds but handsets bringing news to the forest from the city.
The rapid spread of mobile technology in the developing world — especially in Africa, which has lagged behind most of Asia and Latin America in closing the income gap with the west — has given rise to the theory of “leapfrogging”. This has it that, in the words of a World Bank study, countries can make “a quick jump in economic development” by harnessing technological innovation.
Some see in the power of technology an almost miraculous potential to solve problems that many governments, particularly in Africa, have failed properly to address; poor health, poor schools, lack of roads, lack of electricity and lack of jobs. Last week Alibaba founder Jack Ma announced a $10m “Netpreneur” prize for young African tech entrepreneurs who, Mr Ma said, were “paving the way for a better future”.
Ban Ki-moon, the former UN secretary-general who will sit on the prize’s advisory board, articulated the huge claims being made of technology to help poor countries catch up — and even overtake — their richer peers. “With the rapid development of the global digital economy and the availability of technology,” he said, “the next century belongs to Africa.”
A stallholder and mobile phone subscriber in Mahiu, Kenya © Reuters
The term “leapfrogging” is often applied to Africa, though it is also used to describe a path supposedly being charted by India, which is said to have skipped straight to a technology-driven economic model without the intensive manufacturing phase that spurred growth in Japan, South Korea and China. As in Africa, India’s tech entrepreneurs are said to be succeeding where the government has failed. The author Gurcharan Das has said India grows at night “when the government sleeps”.
The spread of mobile and digital technology is seen as the key to leapfrogging. According to Miles Morland, a veteran investor in Africa, Nigeria in 2001 had 100,000 working landlines for a population then around 140m. When in that year, MTN, a South African telecoms company, bid $285m for a mobile operating licence, it estimated that no more than 15m Nigerians would ever own a mobile phone. Today, the country has 162m subscribers, according to Jumia, an online retailer.
In sub-Saharan Africa as a whole, GSMA Intelligence estimates there were 444m unique mobile subscribers in 2017, a penetration rate of 44 per cent. That compares with a global average of 66 per cent, though in countries like South Africa and Nigeria, where nearly nine in 10 people subscribe, mobile phones are as common as in the US, according to Pew Research.
Although mobile phone sales have slowed, many of the 50 countries in sub-Saharan Africa are expected gradually to close the gap on the rest of the world as handsets become more affordable. In Ethiopia, Transsion Holdings, a Chinese company, is already manufacturing handsets costing as little as $10 in an industrial park outside Addis Ababa.
“Access to mobile phones is now virtually ubiquitous,” says Precious Lunga, a Zimbabwean neuroscientist who founded Baobab Circle, a health tech company that uses artificial intelligence to give consultations to patients in Kenya and Zimbabwe. “There are places where there’s still no running water, but you can stream a video,” she says.
The spread of smartphones, which count for a third of all handsets in Africa, opens up the transformative possibilities of mobile technology still further, say technology advocates.
In teeming cities such as Lagos in Nigeria or Dar es Salaam in Tanzania, both among the fastest growing in the world, a slice of the urban elite is using ride-hailing apps such as Uber and Taxify and ordering takeaway food and goods online. In Ivory Coast, Standard Chartered has launched its first digital-only retail bank, saying it will use the west African country as a testing ground for digital services worldwide.
Even more important for the leapfrogging argument is the impact that mobile technology is having on the countryside, where six of every 10 Africans live. Starting in Kenya, with the 2007 launch of Mpesa — Safaricom’s mobile money transfer and payment service— much of Africa is experiencing a revolution in financial inclusion. Tens of millions of previously unbanked people like Mr Ng’usilo can now transfer money to relatives or pay for goods by pressing a few buttons on their phone.
The Kenya-born Harvard Kennedy scholar Calestous Juma
“The mobile handset in the hands of an ordinary African has become the symbol of leapfrogging,” Calestous Juma, the Kenya-born former chair of the innovation for economic development executive programme at Harvard’s Kennedy School, wrote shortly before he died last year. “The mobile revolution has given hope to Africans that they too can be dynamic and innovative players in the global economy.”
The spread of mobile money — now used by an estimated 690m people, of which half are African, according to GSMA — forms the digital backbone for a host of other services. In cities and towns, small businesses can advertise online and collect payments by phone. In the countryside, there has been a rapid spread of pay-as-you-go solar-generated power in which customers buy electricity with mobile money for as little as 50 cents a day and panels are deactivated remotely if payments stop.
In the village of Sahabevava in north-east Madagascar, several hours down a bone-jolting road to the nearest town and far from the nearest electricity grid, Lydia Soa, a farmer, is the proud owner of a solar panel. It produces enough power to light her home — good for when the children do homework — power a boombox and, of course, recharge her mobile phone.
ft.com
African economy: the limits of ‘leapfrogging’
David Pilling in Cape Town August 13, 2018
13-17 minutes
Kotiogo Ng’usilo vividly remembers the first time he saw a car. It was the 1950s and Mr Ng’usilo, a hunter-gatherer from the Ogiek tribe in Kenya’s Mau forest, thought it was a “moving house”.
These days, at 86, though he still tries to preserve a hunter-gatherer lifestyle, foraging for honey and secretly bagging the odd hyrax, he has moved with the times. He wears western clothes, buys food at the market and, like his younger relatives, uses a mobile phone. His story about the old days — which he recounts over sacred honey beer — is interrupted by incessant chirruping, not from birds but handsets bringing news to the forest from the city.
The rapid spread of mobile technology in the developing world — especially in Africa, which has lagged behind most of Asia and Latin America in closing the income gap with the west — has given rise to the theory of “leapfrogging”. This has it that, in the words of a World Bank study, countries can make “a quick jump in economic development” by harnessing technological innovation.
Some see in the power of technology an almost miraculous potential to solve problems that many governments, particularly in Africa, have failed properly to address; poor health, poor schools, lack of roads, lack of electricity and lack of jobs. Last week Alibaba founder Jack Ma announced a $10m “Netpreneur” prize for young African tech entrepreneurs who, Mr Ma said, were “paving the way for a better future”.
Ban Ki-moon, the former UN secretary-general who will sit on the prize’s advisory board, articulated the huge claims being made of technology to help poor countries catch up — and even overtake — their richer peers. “With the rapid development of the global digital economy and the availability of technology,” he said, “the next century belongs to Africa.”
A stallholder and mobile phone subscriber in Mahiu, Kenya © Reuters
The term “leapfrogging” is often applied to Africa, though it is also used to describe a path supposedly being charted by India, which is said to have skipped straight to a technology-driven economic model without the intensive manufacturing phase that spurred growth in Japan, South Korea and China. As in Africa, India’s tech entrepreneurs are said to be succeeding where the government has failed. The author Gurcharan Das has said India grows at night “when the government sleeps”.
The spread of mobile and digital technology is seen as the key to leapfrogging. According to Miles Morland, a veteran investor in Africa, Nigeria in 2001 had 100,000 working landlines for a population then around 140m. When in that year, MTN, a South African telecoms company, bid $285m for a mobile operating licence, it estimated that no more than 15m Nigerians would ever own a mobile phone. Today, the country has 162m subscribers, according to Jumia, an online retailer.
In sub-Saharan Africa as a whole, GSMA Intelligence estimates there were 444m unique mobile subscribers in 2017, a penetration rate of 44 per cent. That compares with a global average of 66 per cent, though in countries like South Africa and Nigeria, where nearly nine in 10 people subscribe, mobile phones are as common as in the US, according to Pew Research.
Although mobile phone sales have slowed, many of the 50 countries in sub-Saharan Africa are expected gradually to close the gap on the rest of the world as handsets become more affordable. In Ethiopia, Transsion Holdings, a Chinese company, is already manufacturing handsets costing as little as $10 in an industrial park outside Addis Ababa.
“Access to mobile phones is now virtually ubiquitous,” says Precious Lunga, a Zimbabwean neuroscientist who founded Baobab Circle, a health tech company that uses artificial intelligence to give consultations to patients in Kenya and Zimbabwe. “There are places where there’s still no running water, but you can stream a video,” she says.
The spread of smartphones, which count for a third of all handsets in Africa, opens up the transformative possibilities of mobile technology still further, say technology advocates.
In teeming cities such as Lagos in Nigeria or Dar es Salaam in Tanzania, both among the fastest growing in the world, a slice of the urban elite is using ride-hailing apps such as Uber and Taxify and ordering takeaway food and goods online. In Ivory Coast, Standard Chartered has launched its first digital-only retail bank, saying it will use the west African country as a testing ground for digital services worldwide.
Even more important for the leapfrogging argument is the impact that mobile technology is having on the countryside, where six of every 10 Africans live. Starting in Kenya, with the 2007 launch of Mpesa — Safaricom’s mobile money transfer and payment service— much of Africa is experiencing a revolution in financial inclusion. Tens of millions of previously unbanked people like Mr Ng’usilo can now transfer money to relatives or pay for goods by pressing a few buttons on their phone.
The Kenya-born Harvard Kennedy scholar Calestous Juma
“The mobile handset in the hands of an ordinary African has become the symbol of leapfrogging,” Calestous Juma, the Kenya-born former chair of the innovation for economic development executive programme at Harvard’s Kennedy School, wrote shortly before he died last year. “The mobile revolution has given hope to Africans that they too can be dynamic and innovative players in the global economy.”
The spread of mobile money — now used by an estimated 690m people, of which half are African, according to GSMA — forms the digital backbone for a host of other services. In cities and towns, small businesses can advertise online and collect payments by phone. In the countryside, there has been a rapid spread of pay-as-you-go solar-generated power in which customers buy electricity with mobile money for as little as 50 cents a day and panels are deactivated remotely if payments stop.
In the village of Sahabevava in north-east Madagascar, several hours down a bone-jolting road to the nearest town and far from the nearest electricity grid, Lydia Soa, a farmer, is the proud owner of a solar panel. It produces enough power to light her home — good for when the children do homework — power a boombox and, of course, recharge her mobile phone.
